Topics: Stock, Stock market, Shareholder Pages: 6 (1317 words) Published: March 22, 2011
Nanyang technological university

AC 208-Written Assignment

Name: Seah Wei Ting Pauline

Matriculation card no: 080298K04

Seminar Group 4

Tutor: Prof. Marc Wang Han Ming

Word count: 1200 words

The issue in this case is whether the purchase of 0.2% of Good Build’s shares by Seng Huat (“SH”) has affected the deemed and actual interests of the directors and shareholders that would directly implicate the register of directors’ shareholdings and register of substantial shareholders of Good Build (“GB”).

In the following discussion, Low and Tan are not associates and apart from Low’s children, no other directors have spouses or children with shareholding in SH or GB.

Register of substantial shareholders[1]

The following 2 sets of information are crucial in determining if Low can be deemed as a substantial shareholder under S81 (1) after satisfying the 20% rule in S7(4).

We need information to investigate if Low and Tan can be termed as associates under S7(5) such that both of them are deemed to have a total combined interest of more than 20% of the total voting shares in SH under S7(4A). If they are associates, Low and Tan will qualify to be substantial shareholders of GB through their ownership in SH.

In addition, we need to establish if there is an associate relationship between Low and his children under S7 (5) to observe if his children’s interest can be deemed as Low’s to contribute to his shareholding in SH, giving rise to a possibility that Low would have deemed interest in BG through SH under S7(4A).

i) Low Keng Huat

Taking a close look at the Low’s interest in SH, we gathered that Low has a direct shareholding in SH of 18% because of S164(15), where his children’s shareholding contributes to his interest in SH. However, the 18% shareholding in SH is unable to deem Low as a substantial shareholder[2] of GB even though SH has more than 5% total voting shares in GB. This is chiefly because the 18% does not meet the requirements of S74A in holding more than 20% shareholding to provide for Low’s deemed interest in GB. As a result, the purchase of GB shares by SH will not involve Low’s deemed interest primarily as it does not have a deemed interest to start with.

As we extend the relationship by including Low’s direct interest of 23.86% in GB, he qualifies under S81(1), exceeding the stipulated 5%, making him a substantial shareholder of GB.

ii) Tan Hup Seng

Tan is a substantial shareholder under the sole assessment of deemed interest or actual shareholding even before SH purchases the shares in GB. Under S7(4A), he is a substantial shareholder of GB through the 5.04% deemed interest due to the 28% ownership of shares in SH, where he met the 20% shareholding requirement. Consequently, the 5.04% deemed interest also fulfill S81(1)[3] to deem Tan as a substantial shareholder under indirect interest.

After SH purchases 0.2% of GB shares, Tan experienced a change in deemed interest in GB to 5.24%. Tan will then be required to notify GB under S83(1)[4] regarding the percentage level of interest has changed.

For actual shareholding, Tan is certainly a substantial shareholder who owns 13.75% qualifying for S81 (1) in owning more than 5% of the total voting shares.

iii) Soh King Boon

Effectively, Soh is not affected by SH’s purchase of 0.2% shares in GB since him nor his spouse or children have shares in SH[5]; thus, his shares in GB remain at 4.51% which does not qualify him as a substantial shareholder under S 81(1).

iv) Raffles Nominees Pte Ltd, DBS Nominees Pte Ltd, Citibank Nominees Singapore Pte Ltd

All 3 companies have more than 5% of the total voting shares in GB and hence they can all qualify as substantial shareholders under S81(1).

v) Seng Huat Pte Ltd

Previously, SH has been substantial shareholder in GB’s register of substantial shareholders under S81(1) as it owned 5.04%. However, due to the increment in shareholding percentage...
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